CAUTIONARY SUGGESTIONS
Your undertaking to learn this Method is evidence that you intend to reverse the rule of the public which is to monkey with the Cryptocurrency market buzz-saw before it knows what makes the wheels go round. As in any other business or profession, art or science, it is essential that you lay a sound foundation by serving an apprenticeship before you begin actual practice. If you were studying to become a dentist, you would not begin by immediately pulling patients’ teeth. If you wish to become a lawyer, you do not begin by trying cases before the court (even if the Bar Association would let you). Your clients would soon discover your inexperience. It is the same way with the Cryptocurrency market. You must study first, then acquire experience by serving an apprenticeship before you begin your actual practice with real patients which, in this Instance, are your own dollars.
The way to lay a solid foundation for success is to begin by: Trading on Paper. This is an inexpensive way to gain experience and to test your ability to apply what you have learned. Some people object to paper trading on the ground that it is like playing poker without stakes, there is no thrill in it. Very well: We ask you to remember that the biggest thrill of all comes when you make your first series of actual trades, with money, and find that they were correct. There will be more thrills as you continue to make successful commitments and discover that you never again are taking big chances nor suffering disastrous losses. If you wish to forego the satisfaction of cryptocurrency
market success for a little temporary excitement, you may disregard this admonition to start by making trades on paper without taking any risk. But if you wish to attain the thrill of achievement, you will begin by trading on paper.
Do this until you find that you are learning what and when to buy or sell. When you decide a certain cryptocurrency is either a purchase or a short sale, write it down in a record book just as if you were placing an order with an exchange.
Study your losing paper trades and compare them with the successful ones so you may locate the cause of your mistakes. Try to correct these when you make the next series of commitments. After making fifty or a hundred such trades on paper without risk, you will know whether or not you are learning to select the right cryptocurrency at the right time. Do not fail to study your weak points.
When making trades on paper, place a stop order on each commitment immediately, the same as with factual money. On a paper transaction it is just as important to do this as on actual purchases and sales, for you want to know when your judgment is wrong, and the penalty for wrong judgment is loss.
After you have completed a successful course in trading and investing on paper, you will be ready to operate with money, but not before. Do not be impatient, to begin trading or to get results. Lay a strong foundation for your future by understanding thoroughly before you make even a single paper commitment. Continue your paper transactions long enough to be certain of your judgment before you venture a dollar.
Do not let anything or anybody lead you to make hasty commitments with real money. If you have subscribed to the Course with this idea and have not the capital to see it through, get yourself into that position before you make your first transaction with cash. Nothing should urge you to begin hastily and to be under a nervous financial strain.
Operating with actual money is more of a test of your ability than paper trading, for when your money is at stake you will be more or less at the mercy of the two devils of cryptocurrency market followers — Hope and Fear.
Therefore, when you start actual operations it is advisable to begin with small lots no matter how large your capital may be. Remember that you are learning the business. You should not try to make money at this stage. It is vital for you first to train yourself. Bear in mind that you do not need any capital to learn how to trade and invest according to this Method. Knowledge of cryptocurrency market technique is far more valuable than capital in the beginning.
The longer you study the Course, the more expert you will become. Do not expect to be a full-fledged operator in a few weeks or months. Bull markets sometimes run for years before a bear market comes along. Even the more experienced traders can forget the tricks they have learned in the last bear market before another one develops; and the reverse is equally true. Therefore, if you start at the beginning or in the middle of one cycle, it may take a long time before you will have the opportunity to learn how to handle your transactions in the other. Hence, you should strive to perfect your judgment by constant practice. Avoid concentrating on one feature of the Course to the exclusion of others. Learn the whole Course. Get the benefit of all of it.
Overtrading is a form of financial suicide. It is the second greatest mistake made by the public. After you have gone far enough with your paper transactions to warrant actual trading and investing, begin with small lots. Provide sufficient capital to keep your mind at ease. If actual results are not as good as in your paper trading, go back to paper trading, then resume later with real money. Try to build up your capital out of profits.
If you make money at the start, wait until you have ample capital before you deal in larger lots. It is much better to creep before you try to walk. There will be plenty of time for you to operate in larger lots after you become more expert. The market will always be there, and the main thing at the beginning is to proceed in such a way that you will build a solid foundation for future successes. If you overtrade at this, or any other stage, that is, spread yourself out too thin, you will be handicapped and perhaps discouraged and defeated by your early experiences. This happens to most people who operate without learning cryptocurrency market technique; they lose their capital before they know how to trade or invest. I emphasize this so it will not happen to you.
Trade in equal lots. Success in active trading means making a series of transactions in equal amounts of cryptocurrency with the result that, after paying commissions, interest and taxes, profits exceed losses.
The man does not live who can make a profit on every transaction.
A loss on a trade is punishment for wrong judgment. The more accurate a trader’s judgment, the less losses he will have. For example, one hundred percent judgment in selecting opportunities means that after a trade is made the price of the cryptocurrency bought or sold does not go as much as a fraction against you. That is the standard which you should strive to equal, and the nearer you come to it, the greater your net profit at the end of the year.
The reason for having the number of coins equal in active trading operations is this: Most people will have twenty-five or fifty coins of this and one hundred or five hundred of that. Usually they aim to make a killing by loading up with the very lowest priced cryptocurrency, i.e., the most speculative and hence the riskiest issues. Result: The losing trades oftenest will be in those of which they have the most, and profits will come on the small amounts. Sound practice demands a series of trades in equal amounts; as you become more expert you will find your profitable trades running several times your losing trades, measured in points and fractions.
If you aim to operate on an investment basis, that is, make commitments for the intermediate and major swings, you may prefer to divide your capital so that, instead of carrying equal lots of cryptocurrency you will have approximately the same number of dollars invested in each issue. That is all right provided you stick to the better class cryptocurrency and do not unbalance your position by placing an unduly large percentage of your funds in “cheap”cryptocurrency.
Whether you are trading for short or long swings, it is better to diversify your commitments than to concentrate on one or two issues. In other words, spread your capital over three, five, ten or perhaps twenty of your best selections; how many will depend upon the amount of money you have available. Say you have picked five candidates, and assume that five is the maximum number of commitments you will normally carry at one time. Even with the best judgment, one of these may go wrong and another may fail to make good as you anticipated. But chances are your profits on the other three will more than offset your losses and you will have at least “one good horse in the running.” However, if you take on, say, 100 coins of just one of your candidates instead of twenty coins of each, you may find that it is just your luck to be in the poorest performer of the lot.
On the other hand, diversification can be carried to extremes as much as concentration. Thus, if you have too many commitments to watch, your judgment may be warped by worry, or lack of time in which to keep an excessively large number of open trades under careful observation.
Where to study the market. This Method may be followed either in a small private office, or in one’s study at home after business hours, or elsewhere in spare time.
If you plan to make active trading your profession, the best way to study the tape is in your private office. It may be a very small office, for all you need is a computer, a desk and a chair.
Judging the cryptocurrency market is a task which requires a careful balancing of one’s faculties. If one’s judgment is pulled this way or that by the numerous, influences which are present on social media, chat boxes, etc, it is almost impossible to keep from being biased. By working in silence and seclusion these confusing conditions are done away with.
It is much better for you to make one commitment a month and realize a profit from it than to trade every day and show a net loss. In the kind of operating which is most profitable, the day to buy is not always the day to sell. If, as I have shown, the important movements in the market take time to prepare and carry through, it must be evident that if you wish to benefit by them you must have patience. This is comparatively easy when, in your private office, or in the evening, you devote an hour to a study of the market and the planning of your moves.
If you have no private office and no time to devote to the cryptocurrency market except after office hours, you are perhaps just as well off, even as an active trader, and certainly so if you are more inclined to investment operations. You can, in a little while, obtain the comparatively few facts that are necessary to compile your own individual records. It is from these records of your own that you can, in the silence of your own room at home, plan your campaigns. You need pay no further attention to the market until the next evening, when you see the results of the day’s transactions. These will either confirm or contradict your previous judgment, or throw doubt upon it, in which latter case you close out your commitments and take a neutral position.
Selling Short is something that many people cannot do as easily as they can trade on the long side. This is such a great handicap that I advise trading on paper until you can sell short as readily as you can take a long position: that is, with an equal amount of mental ease. One who can operate only on the long side of the market is, only half a trader. He sees everything through the eyes of a bull. He thinks everything is always going up. He never can see any money on the short side. The truth is, a chronic bear has a better chance of making money than a chronic bull.
The speculative public is made up mostly of bulls. The speculative public loses on a colossal scale every year except in riotous bull markets, and even than this money is only lent to them for the time being. History proves that chronic bulls mostly lose their profits and more besides. A great part of these losses could be turned into profits if they could see the short side and the many advantages of operating that way when the proper time arrives.
It is not what you make but what you keep that counts.
The average man’s commercial training requires him to buy before he sells. In cryptocurrency trading one must get accustomed either to selling first or buying first. It makes no difference which, in the final result, but the object is to sell at a higher price than you buy.
Selecting Cryptocurrency Search the market continually for the best coins in which to trade. Your charts will show you which these are.
Favor the cryptocurrencies which are the mediums for the largest operations. These usually offer the best action, the greatest facilities for getting in and out close to the last sale, and the most safety in the use of stop orders.
Do not get into a cryptocurrency just because it is in a bullish position or sell it short just because it is in a bearish position. Wait until it gets to the end of its period of preparation and is out on the end of the springboard, ready to go. Let other people play with it until that time. Thus your money will be kept active. You will avoid getting tied up in dull cryptocurrencies, long before they are ready to make money for you. You will avoid being kicked out of your, trades because you got in too soon.
Try to get almost immediate action for your money; not that you can expect a cryptocurrency to move just because you bought or sold it, but because it is bad practice to hold a position for many days or weeks without getting anything out of it.
Try to select the cryptocurrencies that indicate they will move soonest, fastest, and farthest.
Limit your losses and let your profits run. This is one of the fundamental principles in trading. Unless you can follow it you had better not start.
The reason why the public loses so much money in the cryptocurrency market is that most people reverse this rule; they take small profits and let their losses run, often until they go broke.
When deciding upon a trade, decide also how much risk you will take. Reason thus: The action of this Cryptocurrency indicates that it should move in my favor ten or fifteen points. I am therefore justified in risking three points; my prospective profit must always be several times the amount of my risk. I must place a stop so many points from the price at which the trade is made. If the Cryptocurrency moves in my favor, I will move the stop so that the risk will be reduced, then eliminated; then, if the market permits, and a paper profit appears, I will move the stop farther so that a part of this profit will be assured.
The above means: If you are wrong, run quickly. When a Cryptocurrency goes against you, you are wrong to just that extent. It is no sin to be wrong, but to let a lose run into big figures often leads to failure and disaster.
After you have traded for a while, if you find that your stops are being caught too frequently, it will mean that you are not careful enough in starting your trades. Thereafter decide to use more discrimination. Refuse all but the best opportunities. Wait for them. Take your positions as close as you can to the danger points, as shown on your charts. Place your stops according to the requirement of the situation. Study your mistakes and profit by them. Know every minute why you are starting a trade, why you are holding it, and why you should close out.
Placing Orders. In nearly all cases it is best to place your orders “at the market,” except in the case of stop orders, of course. As a rule, limited orders are inadvisable, but not in all cases.
When you have watched a Cryptocurrency go through a period of preparation for a substantial move, and you observe that it is suddenly becoming very active at say 85.50, it is a mistake to place an order at 85.50, or any other limited price, because you may not be able to get it at that figure; it may not be obtainable under 85.60 or 85.70. In trying to save a fraction, you might miss the whole move.
If you are waiting for an opportunity to sell a Cryptocurrency on a rally, or buy it on a dip, and your chart shows you that the trade should not be made unless it goes to about your figure, it is all right to use limited orders. A case would be: A Cryptocurrency advances from 86 to 90 after going through all the stages of preparation, and you believe, judging from its own action and that of the rest of the market, it should react a point or two before it goes on upward. You might then place a limited order at 88.25.
If you are placing orders for execution the next day or are unable to watch the tape or your charts during the day, limited orders are all right in certain cases. However, if you figure, during the evening, that a certain cryptocurrency is in a bearish position or on the edge of a sharp decline, sell it short at the market. Do not use limited orders in such cases.
A limited order always means that it is to be executed at that price or better; in the case of a buying order, at a lower price than the figure stated; in a selling order, at a higher price if possible.
Do not straddle. It is bad practice to be long of one Cryptocurrency and short of another unless you are so proficient and so experienced that nothing will “rattle” you.
When a down trend is indicated, you should be short. When the decline has run its course, you should cover: if there are indications of a reversal in trend, you should go long at the same time. If only a small rally is indicated, you should do nothing until the real buying time is indicated. If an important rally is forecast, you should cover and at the top of the rally, if you judge that the trend is still downward, you should again sell short. But do not try to catch every turn in the market, wait for the best openings.
*Pyramiding. There are certain points, as indicated by the tape or your charts, when it is good practice to pyramid, protecting each additional lot with a stop order.
There are certain other times when the preparation has been completed for a quick and important move in, a Cryptocurrency; when it is out on the springboard, as we call it, and is giving almost positive evidence that the psychological moment has arrived for a pyramiding play. At such times there are two good ways of pyramiding:
(l) By making your initial short sale (or purchase) 300 coins (or 30 or any multiple number of coins) and, as the market goes in your favor, adding to your line 100 (or 10) coins for each one point. Your trade should be started so that your initial stop order will be about three points or less away from your first sale price. A stop order should also be placed about three points away from the selling price for each additional lot. The stop on the 300 coins should be lowered one point for each point the coin declines. The stops on the 100 coin lots should be so moved that none of them will be above the stop price on the 300 lot.
(2) By starting with 100 coins, add 10 coins for each one point the Cryptocurrency goes in your favor. Have a stop on each and every lot. Move all stops the same way as in the first operation above described.
Closing pyramid trades should be done the same as any other trades — when the action of the Cryptocurrency on the tape, or on the chart, tells you it is time to close.
Never get the idea that because a Cryptocurrency shows a clear indication of going up or down, it is time to pyramid. There are only certain conditions under which this form of operation is comparatively safe. I say comparatively because no one can ever make a trade in the Cryptocurrency market with any guarantee or positive assurance of success.
As above stated, the ideal time for pyramiding on the short side is when’ the pressure on a Cryptocurrency is so heavy, and the support beneath it so light, that it shows positive signs of sudden and drastic decline. Or, on the long side, when sudden and insistent demand for a Cryptocurrency shows such irresistible lifting power, as shown on the tape or your charts, that it seems about to be driven suddenly and strongly upward.
There should be evidence of a 10 to 15 point move at least to justify pyramiding.
Orders to buy or sell for the additional lots should be placed “on stop” so that when the price touches the buying or selling prices the pyramiding orders will be executed automatically.
Averaging. Never increase your line when a trade goes against you. Letting a Cryptocurrency run against you more than a few points is bad practice. Letting it run to where you think it desirable to buy or sell more to average your cost is worse practice.
If your judgment was wrong in the first instance, a stop order should have let you out with a small loss. If you had no stop, and the price goes against you, it proves more than ever that your judgment was wrong. Why persist in using wrong judgment?
You may think a Cryptocurrency is cheap at 90 and still cheaper at 80, but remember that it may go to 25 or 10. Neither a trader nor an investor has any business to be in a Cryptocurrency after it goes few points against him. So eliminate the idea of averaging. Never average in trading.
Closing Your Trades. This should be done on positive tape or chart indications. Just as there must be good reasons for beginning a trade, there should be other good reasons for staying in it and closing it.
The market constantly tells you what to do: Be long; be short; be neutral. When it says “be neutral” you should close your commitment, whether there be a profit or a loss in it.
If you don’t get out on the rises, rallies or booms, you will have no money with which to buy in the slumps, panics and depressions.
And when you are short, if you don’t cover when they are weak, you will probably lose your best chance.
“The best time to buy Cryptocurrency is when they are all going down together, and the best time to sell is when the whole body of Cryptocurrency is strong.”
IMPORTANT POINTS
1. Practice the principles in this course by making trades on paper.
2. Greed and fear are two emotions which will affect you most when you begin trading with money.
3. Overtrading is a form of financial suicide.
4. Trade in equal lots of cryptocurrency for ‘speculative’ purposes.
5. For investment purposes you may wish to trade in equal amounts of capital.
6. Diversify your commitments.
7. Study the market in solitude for an hour or more each day.
8. Learn the art of selling short.
9. Select those Cryptocurrency which will indicate that they will move soonest, fastest, and farthest.
10. Limit your losses and let your profits run.
11. Do not straddle the market (holding a long and a short position simultaneously.)
12. At times, it is a good practice to pyramid your position.
13. Never average your commitments to compensate for loss.
14. Close your trades on the basis of tape or chart indications.
Credit: https://learncrypto.io/lessons/lesson-22-general-instructions/